The leader of the right-on retail pack

Image 1 of 2

Steve Esom: ‘One of the challenges of being a leader is that you will have imitators’

Image 1 of 2

12:01AM GMT 18 Nov 2006

Esom dismisses Waitrose's imitators, writes Richard Fletcher

Steve Esom, the managing director of Waitrose, is in London for a seminar of the great and the good to talk about how retailers can help smaller suppliers. If the last four hours locked in debate with the likes of Sir Don Curry and John Gummer have taken their toll, he is not letting it show. Esom is on fighting form.

A few years ago Waitrose was a lone voice among food retailers when it talked about animal welfare, local suppliers and ethical trading. J Sainsbury had lost its way and Tesco and Asda were so busy competing on price and developing clothing ranges they appeared to have forgotten about the core food product.

But these days Esom can barely be heard as his larger rivals outdo each other to be the greenest and most ethical "foodies".

Justin King, the chief executive of Sainsbury's, has put quality food at the centre of his recovery plan. "Great products at fair prices," is Sainsbury's new mantra. Tesco has invested £100m in an environmental technology fund and Asda has won awards for its work with local suppliers. No longer do food retailers boast about cutting prices by £25m – they want to talk about working with dairy farmers or selling more English apples.

"One of the challenges of being a leader is that you will have imitators," says Esom.

But with the larger supermarkets now claiming to be as concerned as Waitrose about sustainable fishing and the welfare of chickens, where does that leave Waitrose? What can I buy at Waitrose that I can't get at Sainsbury's or Tesco?

"Vanilla pods," fires back Esom after a few seconds' pause. Waitrose apparently has a much larger range than everyone else. Esom also cites sultanas and raisins – named varieties with details of their provenance and origins.

The sultanas are very nice (although I'm afraid I cannot vouch for the vanilla pods) but it hardly seems the most convincing reason to shop at Waitrose, particularly given the premium prices charged by the retailer. The latest price survey by The Grocer reveals that Waitrose shoppers pay £5.84 more for a basket of 33 typical products than Sainsbury's customers.

"Customers didn't ever say they wanted cheap food. They shop with us because we sell a different range of foods. Higher quality food and different foods," says Esom.

He cites poultry as an example. "The reason we charge more for poultry is that it is a fundamentally different production regime," he argues.

Taking a swipe at rivals, Esom questions whether rival retailers will still be as committed in "two or three years". "Lots of promises are being made. But are they able to deliver? Customers are going to be disappointed," he adds.

He also believes that in many instances Waitrose is selling fundamentally different products. "Some organic standards are easier to obtain," he argues, citing the example of eggs.

Waitrose free range eggs are Soil Association-certified, while others use the Organic Farmers and Growers certification, a less rigorous standard in Esom's opinion. So who doesn't use the Soil Association standard? "Its not my job to name and shame," he says.

Under Esom, Waitrose has grown rapidly and floor space has increased by 50pc since 2001. But the business remains small compared to rivals: in the year to January 2006, Waitrose made profits of £231m on sales of £3.3bn. Tesco's UK profits alone topped £1.6bn in the same year on sales of £32.6bn.

Much of the growth came from acquiring almost half of the 52 Safeway stores that Wm Morrison was forced to sell following its acquisition of its rival. For Sir Ken Morrison, selling to Waitrose made a lot of sense: the fact that he had to dispose of the stores meant he had a Morrison store nearby and he would much rather compete with Waitrose than Tesco or Asda.

But has it proved such a good move for Waitrose? A store acquired in Southport has already closed and rivals question whether Esom has stretched the brand too far.

Esom insists the stores are performing well: "We are now attracting people who wouldn't have considered Waitrose 10 years ago."

Southport was a one-off, he adds. The retailer has since opened a store a few miles down the road in Thornby – a location it had been targeting for many years.

"We had wanted a store in Thornby for some time. All but three staff transferred," he says.

The focus on staff is typical of Waitrose. Part of the John Lewis Partnership, Waitrose has a co-operative ownership structure.

That structure has come of age, argues Esom, with the current focus on stakeholders and corporate social responsibility. "We are no longer seen as rather odd or niche."

Esom was picked out as a high-flyer while working as a buyer at Sainsbury's and appointed personal assistant to Lord (John) Sainsbury. "He was such an instinctive retailer. It was very instructive. I learnt so much," says Esom.

But his big break came in 1989. Sainsbury's had just bought Shaw's, an American supermarket chain and a colleague asked Esom if he would go the US. "It was very character-forming. I had to stand on my own two feet and adapt to a different business culture. I learnt a lot about business and myself,"

He returned to Sainsbury's but left a couple of years later to run Texas Homecare for Ladbrokes Group. In 1995 he joined Waitrose as a buyer director and was made managing director in 2002.

So could Esom imagine working anywhere else? "I could not imagine doing it differently. I don't think I could have had as much freedom in any other business. I have had the opportunity to do what I think was right," he says.

The question is, with others now encroaching on his turf, is doing the "right thing" still enough?